Professional Documents
Culture Documents
1. The freight on shipments to branch paid by the home office is recorded by the
home office as
A. Credit to cash C. Credit to Investment in Branch.
B. Credit to freight-in D. Debit to Freight-in
2. Which of the following statements is (are) true regarding sales agency and
branch?
I. A sales agency is not a self-contained business but rather acts only on
behalf of the home office.
II. A branch is a self-contained business which acts independently, but within
the bounds of the company policy and subject to the control of the home
office.
4. Hari Pata sells crispy pork pata. It opened a branch in Maguindanao and I’m
surprised the owner is still alive. Anyway, on the home office financial records
at the end of 2018, Hari Pata reports Investment in Maguindanao branch account
with a 167,000 debit balance. The branch operation reports on the same date a
Home Office account with a 162,000 credit balance. Which of the following
statements is true?
A. Since two different sets of records are being kept, these two accounts
are not designed to agree.
B. The difference indicates that cash may be in transit from the branch to
the home office.
C. Cash may have been collected by the home office for the branch but not
yet reported to the branch.
D. The difference indicates that the home office might have assigned a
6,000 expense allocation to the branch that was incorrectly recorded by
the branch as 11,000.
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II. Solve, and give what is required of each problem. Write your answers in a
separate sheet of yellow paper.
Problem 1
An entrepreneur named Dina put up a business that sells chicken harvested and
sold on the same day. She was able to secure a stall in the market. She named her
business, “Dina Fresh Chicken”. Her chicken business wasn’t so good, despite the
actual freshness of her chicken and her strict quality control. Up to this time,
she is clueless as to why her business wasn’t a successful one.
Not wanting to give up on business, she put up another business involving another
one of her interests: Watches. She started her watch business which she named,
“2nd time around”. Her business specializes in selling low-cost, second-hand
watches. This time, her business boomed. And in just a year, she decided to open
a branch in Timetime, Rizal. The home office is located in Oras, Isabela.
Required: Prepare journal entries for both the home office and the branch to
record the previous transactions. (10 points)
Problem 2
On December 31, 2018, the Investment in Branch account on the home office’s books
has a balance of 102,000. In analyzing the activity in each of these accounts for
December, you find the following differences:
1. A 12,000 branch remittance to the home office initiated on December 27, 2018
was recorded on the home office books on January 3, 2019.
2. A home office inventory shipment to the branch on December 28, 2018 was
recorded by the branch on January 4, 201; the billing of 24,000 was at cost.
3. The home office incurred 14,400 of advertising expenses and allocated 6,000
of this amount to the branch on December 15, 2018. The branch has not
recorded this transaction.
4. A branch customer erroneously remitted 3,600 to the home office. The home
office recorded this cash collection on December 23, 2018. Meanwhile, back
at the branch, no entry has been made yet.
5. Inventory costing 51,600 was sent to the branch by the home office on
December 10, 2018. The billing was at cost, but the branch recorded the
transaction at 40,800.
http://bit.ly/finalspretest1